WHAT'S WRONG WITH JAPANESE ELECTRONICS?

Stock price of Sony, Panasonic

SONY, PANASONIC was the world class electronics brand until 10 years ago. Then today their brand image, market share, stock price and profit are all in deep bottom and looking up Samsung, LG and Chinese makers who used to be subcontractors for their own. The employees in Sony, Panasonic and other major Japanese large makers are always very stoic and work very hard. But still they cannot make it.


Why this happened? Here is my observation as one of ex-employee of Japanese Giants.


BUSINESS MODEL

• "NOW THEY CANNOT SELL THE PRODUCTS AT THE PRICE THEY WANT"
  Such a simple phrase tells everything.  They always think about customers and market, and trying to create the best products for them.
  Why they do such a hard-work but cannot get return?
  



Sony HQ building, Tokyo

• "They spend their time to the area customer is not interested.They are always under pressure that they always have to fully satisfy their customers. They believe customer always wants the best quality, best design, grate number of features. They show the excellent craftsmanship to build the excellent products which they want. Then cost goes up, and their profit never catch up the cost.
  
•  "Market needs new value measurement"Yes there are some customers who wants the best quality, best design and best features. But it is not the majority of customer's voice any more. Sony launched Walkman at 1971.  It does not have speaker.  No recording function.  Sound quality was just so so, not comparable to nice audio set in a living room. But it has got great value for young generation.  It was the moment that music went out from houses.
  
• "Same device everywhere, anyone can make the same"
  From the late 1990s, manufacturing process comes to component block assembly.
  Device is standardized, subcontractors becomes competitors. Competitors make the market price lower, and made Sony, Panasonic less competitive.
  
• In balance of cost and market value, this is what they have to understand.
  If they make the products same as Apple computer, they cannot beat Korean and Chinese. Because they make the same products as Apple while you look at the production capacity and cost, it is obvious.
  
• What they need to do?
  They should admit conventional electronic business almost ended. In order to survive and get out from financial crisis, they cannot help but downsize the operations. They have to limit manufacturing facilities only for extra high value.
  Then they have to challenge and create totally different market value.
  In such movement, they should not stick to the high quality, many feature, good design.  They are competencies for Japanese, but you have to believe their creativity can overcome these existing competencies.
  

FINANCING

•  "DIRECT FINANCING WAS TOO SUCCESSFUL IN THE PAST"
• Sony is the first Asian company who bring their stock in overseas stock market (in 1970 at NY exchange market).
• Sony's stock was appreciated in the world, and it makes Sony much easier to finance at competitive rate.
• When the business goes well, it worked very much, but it's side effect (fluctuation of market price) suffers the company more when the business does not go well.
  

MANAGEMENT ISSUES

• "SAME AS ALL OTHER HUGE COMPANY BUT .."
• Too frequent organization change and management change.  It was Sony's culture from the founder's period. But nowadays, it's too much.
  They changed 7 directors of TV business group in 10 years. 
• Managements look for only monthly bases not decades as the result of this frequent changes. Middle management also do the same.
• It make all staffs unconcerned about top management message (since it changes frequently) and loose loyalty to company.
• By having many job cut, many 1st class people left from the company, and many of them becomes assets in competitors in Korea, China or other industries.
• Bureaucratic grows and makes all process slow, conservative and creates many new staffs who has excellent background but just critics.

　

TO BE A CHALLENGER

Sony History Museum in Shinagawa, Tokyo

• Don't be pressed by huge success story in the past, but do learn from the spirits and motivations what their founders had.